Mosley v. Magnolia Petroleum Co.

• Decision Date: 10 June 1941
• Docket Number: No. 4312.,4312.
• Citation: 114 P.2d 740,45 N.M. 230
• Parties: MOSLEY et al.v.MAGNOLIA PETROLEUM CO. et al.
• Court: New Mexico Supreme Court

45 N.M. 230

114 P.2d 740

MOSLEY et al.

v.MAGNOLIA PETROLEUM CO. et al.

No. 4312.

Supreme Court of New Mexico.

June 10, 1941.

Appeal from District Court, Lea County; James B. McGhee, Judge.

Action by Ennis C. Mosley and others against the Magnolia Petroleum Company and the General Crude Oil Company, to quiet title to an undivided one-half interest in oil, gas, and other minerals under a designated tract of land, and to cancel deeds purporting to transfer mineral interests therein. From an adverse judgment, plaintiffs appeal.

Reversed and remanded, with instructions.

G. L. Reese, Sr., of Roswell, G. L. Reese, Jr., of Carlsbad, and Fred O. Jaye, of De Leon, Tex., for appellants.Atwood & Malone, of Roswell, Palmer Bradley, of Houston, Tex., and Hervey, Dow, Hill & Hinkle, of Roswell, for appellees.

PER CURIAM.

Upon consideration of the second motion for rehearing, previous opinions are withdrawn and the following substituted:

BRICE, Chief Justice.

This action was instituted by appellants (who will be styled plaintiffs) to quiet title to an undivided one-half interest in the oil, gas and other minerals in and under 160 acres of land situated in Lea County, New Mexico; and to cancel certain deeds purporting to transfer mineral interests therein to appellees (who will be styled defendants) and their predecessors in title.

The plaintiffs, who held by patent from the United States, pleaded in detail a chain of title from them to the defendants, and alleged that a certain deed purporting to have been executed by them to one Burke, through which each of the defendants claims a one-fourth interest in said minerals, was a false, forged and altered instrument, and passed no title; by reason of which all subsequent conveyances in each of the defendants' chain of title are void; that title had never passed from them.

The defendants pleaded the general issue, and specially, in substance as follows:

The plaintiffs knew, a year prior to the date defendants' predecessor obtained a deed from Burke, and more than seven years prior to the filing of this suit in the district court, that the Burke deed had been altered in the manner hereinafter stated, and that the altered deed was of record in the deed records of Lea County. They knew that some interested person might at any time purchase this property, relying upon the apparent validity of the Burke deed, and the fact of its alteration would not be disclosed by the record or become known to him unless plaintiffs should seasonably institute legal proceedings such as this suit, or otherwise make a public record of their claim, which they failed to do.

That defendants and their predecessors in title had no knowledge of any defect in said deed or of any fact that would put them on inquiry regarding it; that they purchased said interests in reliance upon the title as disclosed by the public records and the opinion of reputable attorneys that the title as thus disclosed was good; that they were without knowledge, actual or constructive, that plaintiffs claimed any interest therein; that the plaintiffs, from the date of the sale to Asbury, knew that the property was steadily increasing in value; that at the date this suit was instituted (which was after oil had been discovered in the vicinity of the land) the property was worth many thousands of dollars.

That it was the duty of the plaintiffs, under the circumstances stated, to protect unknown purchasers against the hidden defect in the Burke deed by making a public record of their claim, either by court action or otherwise; so that any person interested in its purchase would be advised thereof and not necessarily rely upon the record of the void deed, and thereby be induced to purchase said property in the belief that the deed was genuine; which duty they failed to perform.

That by reason of the facts stated the plaintiffs are estopped, and are barred by their laches from maintaining this action, or to establish title to the property in suit as against defendants.

The plaintiffs replied to the defenses of estoppel and laches, in substance, that when they discovered the record of “the false, forged and materially altered deed” in June, 1928, in order to protect their title and show by the public record their claim to the property the plaintiff, Ennis C. Mosley, on the 7th of June, 1928, executed, acknowledged and delivered a mineral deed conveying an undivided one-half interest in the minerals in said lands to plaintiff Mrs. Nellie E. Mosley, which was placed of record on that date; and thereafter on July 2, 1928, in order to give further notice of plaintiffs' claim, the plaintiff Nellie E. Mosley executed and delivered to plaintiff Ennis C. Mosley a like conveyance, transferring the same property back to him, which deed was duly acknowledged and placed of record on the 3rd day of July, 1928. That at the time of the purchase of said property by defendants and their predecessors these deeds were of record. That in June, 1928, they employed attorneys to protect their interests by filing suit to cancel the Burke deed, and were advised by said attorneys, after a delay of two or three months, that plaintiffs did not have a cause of action. That they did not again employ attorneys, or make arrangements to sue, until a short time before this action was instituted. That defendants had notice of plaintiffs' claim when they purchased said property, and had no legal right to rely alone upon the record of said altered deed.

The facts, as found by the trial court, are, in substance, as follows:

That prior to 1927 plaintiffs were the owners in fee simple of the 160 acres of land in question, evidenced by a patent from the United States, dated August 10, 1921, and recorded in 1926. They sold the surface rights, and leased the reserved mineral interests. Thereafter, on November 29, 1927, they agreed to sell and convey to one Asbury an undivided three-fourths interest in the underlying minerals for $800, subject to the oil and gas lease mentioned. In the execution of this agreement, and at Asbury's suggestion, two deeds were signed and acknowledged by plaintiffs, one conveying to Asbury an undivided one-half of the mineral interests mentioned, and the other an undivided one-fourth thereof.

By agreement of the parties the deeds were sent to a bank at Cisco, Texas, to be held by it as escrow agent for thirty days, during which time Asbury had the privilege of paying the purchase price and taking the deeds; failing which, the deeds were to be returned to plaintiffs by the bank. Upon receipt of the deeds by the Cisco bank, Asbury tortiously secured possession of the one conveying the larger interest, after which (according to defendants' brief and the findings of the court)-

“*** Asbury and Bates took the one-half deed to Bates' office at Cisco and by the use of a chemical eradicator removed the name of Asbury, as grantee, and inserted the name of E. T. Burke. They also removed the figure ‘1/2’ in four places where it had been written in the deed to indicate the interest conveyed and wrote in lieu thereof the word ‘one-half’. In like manner they erased the land description ‘SE1/4’ and wrote instead ‘Southeast Quarter.’ The consideration shown in the deed was Five Hundred Dollars written in words and figures, and this was changed to Ten Dollars. The wife of Mosley had signed the deed ‘Nellie E. Mosley;’ the initial ‘E’ was removed from the signature and from the certificate of acknowledgement. The word ‘who’ in the certificate of acknowledgement was changed to ‘her’ in the last line.

“After these alterations were made in the deed, Asbury and Bates took the deed and abstract to Abilene, some fifty miles away, and at Burke's direction, submitted them to Burke's attorney for a title examination. The abstract contained only a few entries and the examination was completed and the title opinion written and delivered to Burke on the same day. The title was approved and the purchase price of $800 for the one-half interest, was paid by Burke on the same day. Asbury and Bates returned to Cisco the same day and took up the Mosley draft with the proceeds from the sale to Burke, and thereupon received the one-fourth deed, which had remained in the bank ***.”

“The altered deed which was delivered to Burke was forwarded for record by him and was filed for record in Lea County, on December 14, 1927.”

Before J. H. Reynolds purchased said property from Burke for Cranfill & Reynolds (now defendant General Crude Oil Co.), he had made a complete abstract of the title thereof and caused the same to be examined by an employee in their behalf.

Before the defendant Magnolia Petroleum Corporation purchased an interest from Cranfill & Reynolds, it had a complete abstract of title thereof examined by its attorney, who had none of the original papers before him and none of the alterations in the Burke deed were shown by said abstract, and it purchased without knowledge of any of the changes in the Burke deed, or claims of plaintiffs.

The alterations in the Burke deed were made without the knowledge of the Cisco bank, and plaintiffs first learned of them by an inspection of the deed records of Lea County, about June 22, 1928; but they never knew that these alterations were made in the deed while it was tortiously in Asbury's possession, and that the deed had never been delivered, until so stated by defendants' counsel at the opening of the trial of this suit.

At the time Asbury contracted to buy the property it was of the value of $800, and thereafter steadily increased in value, and at the time this suit was filed it was worth many thousands of dollars.

In June, 1928, plaintiffs contracted to convey to one Payne an undivided one-half interest in the minerals in said land, but were informed that according to the record title they had theretofore conveyed three-fourths to others. It was at this time they discovered the alteration of the Burke deed by an...